ADC Telecom a Buy on Valuation

Sat. September 06, 2008; Posted: 07:10 AM

Sep 06, 2008 (Zacks Investment Research via COMTEX) -- ADCT | Quote | Chart | News | PowerRating -- ADC Telecommunications (ADCT) declared third fiscal 2008 financial results below our estimates. The company's business was impacted by general macroeconomic weakness that resulted in restricted capital spending on the part of telecom service providers and original equipment manufacturers. According to our assessment, the long-run business fundamentals remain intact for ADCT as increasing demand for video streaming and larger investments by enterprise customers for high-density data centers are expected to foster telecom carrier implementations for high-speed wireless and FTTX networking. Deployment of fiber based networks continues to grow as a result of massive demand for greater bandwidth. Telecom service providers are likely to increase, or at least proportionate, capital expenditures for fiber connectivity following two years of ongoing industry consolidation. The company's ongoing restructuring is expected to result in meaningful cost savings over the next two years. While international business for the company accounted for 44% of its total third quarter 2008 sales, wireless coverage capacity solutions remain significant growth opportunities for the company. Acquisitions of LGC Wireless and Century Man improved the company's financials. ADCT is trading at 7.9x our estimated fiscal 2009 forward earnings, which represents a significant discount to both the forward P/E ratio for the industry group and the S&P 500 average. With respect to other selected valuation metrics, the stock is also trading below its peers. However, near-term earnings fluctuations may continue due to general macroeconomic uncertainties. We maintain our Buy rating with a six-month target price of $18 based on 15.5x P/E using our fiscal 2009 earnings estimates, at par with the peer average. Nalak Das contributed to the report. Read the full analyst report on ADCT

Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all today?s Analyst Blog entries.

For full details on ADC Telecommunications Inc (ADCT) click here. ADC Telecommunications Inc (ADCT) has Short Term PowerRatings of 6. Details on ADC Telecommunications Inc (ADCT) Short Term PowerRatings is available at This Link.

More News: Market Updates | Stock Alerts | All Trading News | Stock Index

Archives

Feedback

Email Article Link

Close X

RELATED SITES

Please call 1-213-955-5858 ext. 1

Tax Relief Bank Levy Wage Garnishment

Disclaimer:

The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.

It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.

The Connors Group, Inc.
15260 Ventura Blvd., Ste. 2200
Sherman Oaks, CA 91403

All analyst commentary provided on TradingMarkets.com is provided for educational purposes only. The analysts and employees or affiliates of TradingMarkets.com may hold positions in the stocks or industries discussed here. This information is NOT a recommendation or solicitation to buy or sell any securities. Your use of this and all information contained on TradingMarkets.com is governed by the Terms and Conditions of Use. Please click the link to view those terms. Follow this link to read our Editorial Policy.